The trouble with referendums

Excellent analysis of the 3 answers problem for the referendum.


How a democratic process can lead to consequences of a questionable democratic character

People are a motley crew, really. Every one of us has their own set of preferences. Thankfully the free market makes sure that someone offers exactly what we want – no matter how exotic or how obscure. We choose these products over here and those services over there, and thanks to the miracle of the market all these preferences are aggregated, and suppliers do whatever is needed to match their offer with what we consumers expect.

In a way, a democratic electoral system has a similar purpose: to combine the preferences of all the voters, and produce policies that represent the wishes of the entire electorate.

Unfortunately, elections don’t always deliver the goods (or services) in the way the market does.

To understand why, it’s a good idea to start with conventional micro-economics, which describes how rational…

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